A flood of Covid-19 litigation looms, with lots of sharks – Business Day
London — When disaster and tragedy strike the US, Ken Feinberg is usually the man left holding the purse. As a so-called “special master” of compensation funds, the 74-year-old has distributed more than $20bn over his unique career, somehow putting a dollar price on incalculable loss and suffering.
Soldiers exposed to toxic Agent Orange, victims of the September 11 2001 terror attacks, the BP oil spill in the Gulf of Mexico, the Sandy Hook massacre, sexual abuse cases in the Catholic Church, VW emissions scandal — when the stakes seem high enough, politicians turn to Feinberg to offer a form of justice, some restitution and an alternative to court.
Today, like many in the US, he is largely stuck at home. He sometimes sneaks out to his small law office in Washington (alone in the car, alone in the building). And, once in a while, he fields calls from staffers and politicians in Congress. They are curious to know whether the Feinberg magic — and a hefty compensation fund — might best serve the victims of coronavirus America and spare the legal system a deluge of litigation.
“Listen. Agent Orange: settlement. Tobacco: settlement. 9/11: settlement through an alternative compensation programme. BP: the same,” Feinberg declares, with the twang of the Boston suburbs. “One thing I have learnt over the last 40 years with mass disasters: the rule is some sort of creative resolution mechanism rather than resorting to the courtroom, judges, juries and trials.”
It raises a profound question for policymakers around the world. Coronavirus has wrought untold damage, both economic and physical. More than a quarter of a million people so far have died prematurely. Whole cities have come to a standstill. Businesses have withered. The toll rises daily. But is anyone at fault? And should somebody pay?
For some, litigation offers redress, a means to recoup losses, or make good on contracts. Trial lawyers are mobilising, seeing an almost bottomless well of negligence cases against employers, and businesses big and small. Stricken companies are turning to insurers. Others are trying to shed obligations. All, in theory, have equal protection under law.
“While we hate the idea of trading on human misery, the reality is that the world post-Covid is going to be a world with an awful lot of disputes and less corporate liquidity to pursue those disputes,” said Christopher Bogart, CEO of Burford, one of the world’s biggest funders of litigation, in a recent call with analysts.
But such a welter of suits may bring considerable costs. Parts of the legal system in the US and Europe are semi-comatose, with courts shut and trials delayed. Even more importantly, the vast potential liabilities will greatly exceed the ability of many defendants to pay them. Once lockdowns are lifted, fear of costly suits alone could hamper the recovery.
“Once you go off to court, it may be too late to help the economy,” says Malik Dahlan, professor of international law and public policy at London’s Queen Mary University.
Jointly with several academics and former top judges, Dahlan has called for legal reforms around the world to offer companies breathing space, encouraging pre-litigation settlement to avoid a barrage of aggressive coronavirus suits. “What we have in Western societies is the rule of law — a rules-based system where at the end of the day rules are informed by a certain level of morality and ethics,” he says. “The legal system is about justice, and you can’t have justice without compassion.”
Various governments are exploring options. Republicans in the US Congress are demanding that companies be shielded from litigation. Singapore has already legislated to do so, encouraging disputes to be resolved through mediation or reconciliation. Britain, meanwhile, is paying £60,000 to the families of health workers who lost their lives after contracting coronavirus. It is a small echo of the 9/11 fund, set up in the weeks after the attacks on the World Trade Center to compensate victims.
Ever the mediator, Feinberg can see both sides. “Here’s the argument. Coronavirus is like 9/11, it’s unique. We’ve never had anything like this, so come on! This is a horrible communitywide national disaster and it is worthy of some kind of creativity, a one-off compensation programme.”
“But,” he says, pausing. “If you set up a programme, no good deed goes unpunished. They are ripe for criticism. If you decide that something special is needed, then brace yourself. Who is considered special? You are opening up a hornets’ nest of issues.”